My Call for the summer
I am a bull, and even have been told that I am full of Bull.....I think that was a compliment?
So why am I a bull and why don't I read a zillion charts, and why do I guess right.....absolutely without failure 100% of the time. It is rather simple really and can be explained.
First, lets look at any exchange, all exchanges are made up of Indices. The indices contain groups of stocks that represent that indices group. So of course you find all the Biotechs in the biotech index, etc.
In the end what makes a market move up or down is the value of the indexices contained within that market. So if we look at the nasdaq the index for Technology is weighted very heavily in the Composite and therefore plays havoc with that market everytime it moves, up or down.
So I tend to ask myself the question, what indices will do well in this environment and which will do poorly in this rate hike environment.
Well it doesn't take a rocket scientist alot of time to figure out that "transportation Index, will likely suffer during this period because interest rates and high oil prices don't help. But what about the oil index?? Well it should go up because there will be an oil shortage this summer. What about the Oil services index well that should also rise because oil drilling will pick up. What about the resource index? Well base metals are recovering and LME reserves are dropping, so yes the Mining Index and resource index should rise. What about the Forestry index? Well yes, it should rise as well paper prices are rising and the cost per tonne is scheduled to rise again by the end of this month. What about media??No, they should probably fall because they rely on the paper industry, higher costs and they lose money. What about the "fertilizer" index. Well yes Nitrogen and Potash prices have been rising steadily and are forecasting larger demand.
Auto & Auto Parts Index, well no, they should actually suffer a bit with higher rates, but incentive programs may bridge the gap, but overall profits should fall. What about the real Estate Index? Well housing starts have fallen, that puts a shortterm squeeze on existing real estate that is spurred on by this "smokin economy" so yes Real Estate will rise in the shortterm
What about Pipelines? Well there will be an electrical shortage in the US this summer. Pipelines push GAS and OIL so they will do well. What about the Utliities Index. Well they'll have to pay more for Oil &Gas but they will be satidsfying a demand, so they will rise as well.
My point is by the time you run down the all of Indices only about 8 out of 30 will do poorly. This is not a BEAR scenario....its not even close.
"I predict" a "super summer" with the markets going higher. Nasdaq wil continually realign in the 3651.45792 area. Some companies on the NAS will rise and other companies on the Nas will fall , but the result will be an average of 3651.45763 in the shortterm.
The DOW will blow 11,000 in the next couple of days and continue on as profits from all of the indices are reported. DOW will reach 12,531.564 by September or earlier. TSE ( I am Canadian ) will break 10,000 this week or early next week with a forecasted September number of 10,851.23 It will be propelled by resource stocks, biomeds, pharmaceuticals, Real Estate, etc etc.
We will have a very bullish summer, however, September will be the end, and I mean the end. We will run into some very very bad times during the last 4 months of 2000
Our ability to pull a bear out of a bull will be tested and saved by one thing and one thing only.....Asia....it better be hoppin by then!
thats it thats all, I'm finsihed for Longer term...now Shorterm
the Chief |
